PUC’s Kabuki dance extends to San Onofre, San Bruno: Thomas Elias

For many decades, the California Public Utilities Commission and the big companies it regulates — Pacific Gas & Electric, Southern California Edison, Southern California Gas and San Diego Gas & Electric have engaged in an elaborate Kabuki dance every time any company wants to raise rates.

Each time, the companies name a figure that’s preposterously high, then moan a little when the PUC knocks it back — and the consumers end up paying steadily more and more, to the point where California electric rates are the highest in the 48 contiguous states.

Now the Kabuki pattern has extended to other forms of PUC business with those same companies, including the commission’s entirely justified efforts to penalize PG&E for its negligent (word employed by federal authorities who have indicted the firm) management of natural gas pipelines and the efforts by Edison and SDG&E to have their customers foot most of the bills for their blunders at the now-shuttered San Onofre Nuclear Power Station.

As usual, the new Kabuki dances take the form of utilities asking preposterous amounts. Also as usual, they will get knocked back but, it now appears, not nearly as far as they should be. In both cases, the companies should get no new money at all for handling disasters they’ve created and trying to prevent new ones.

PG&E, for example, seeks billions of dollars in new rates plus more money to upgrade its pipeline system, when it has been dunning consumers since the 1950s for just such upgrades and maintenance, while not carrying enough of it out. No one knows just where the maintenance money went, or how much has not been spent as it should have been. The obvious decision here should be to deny any PG&E rate increase until the pipelines are up to snuff, as determined by an outside authority.

San Onofre, involving majority plant owner Edison and its minority partner SDG&E, is a bit different. This plant operated well until February 2012, when a tube leak caused the failure of costly steam generators, eventually forcing one of California’s two nuclear power plants into retirement.

Immediately, Edison and SDG&E began buying replacement electricity, much of it from “peaker” plants nearby that operate mostly at times of the greatest power use. The companies right away charged their customers not only for the usual costs associated with maintaining San Onofre and their guaranteed rate of profit on their investments in it, but also for the replacement power.

So customers were paying twice for the same power, all due to the mistakes of Edison (the plant’s manager) and its supplier, Mitsubishi Heavy Industries.

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Edison is trying to get billions of dollars back from Mitsubishi, which designed the faulty steam generators.

The utility has essentially asked $4.7 billion from its customers for retirement costs at San Onofre, the replacement energy and continuing San Onofre costs. When Edison and SDG&E last month agreed to take about one-fourth less, there were major headlines like this incorrect one from the Los Angeles Times: “Customers would get $1.4 billion in refunds in San Onofre deal.”

Not exactly. Customers looking for such refunds on their monthly bills will be disappointed, for even Matthew Freeman, attorney for the consumer group Toward Utility Rate Normalization, who negotiated the agreement with the San Onofre partners, says funds returned to consumers would come as reduced future rates, rather than cash.

“We started out this negotiation saying the customers should not pay for replacement energy if they’re still paying San Onofre operating costs,” he said. “That principle is preserved here.” So Freeman and TURN think they got the best deal the PUC would ever approve.

But Ray Lutz, head of the El Cajon-based consumer group Citizens’ Oversight (not part of the negotiation) says that leaves the utilities with what he calls “an outright theft of $3 billion.”

“Edison was imprudent, they made a big design mistake and blew it with San Onofre,” he said. “The ratepayers should not be paying for this.”

But they likely will, just as PG&E customers figure to pay plenty for PG&E’s negligence. That’s what the Kabuki dance is about, and there are no signs it will end soon.